The Tax Publishers2020 TaxPub(DT) 4677 (Del-Trib)


Section 37(1)

Where LTC, travelling and conveyance expenses bills were submitted by employee during the relevant year, whereas journey was undertaken in previous year hence, the claim were settled in the assessment year (2009-10) the addition for expenditure was rightly deleted by the CIT(A) on account of prior period expenses.

Business expenditure - Prior period expenses - Expenditure crystallized on bills submitted during relevant year -

AO framed assessment order under section 143(3) read with section 142(2A) on 30-4-2012 making total addition/disallowance. Assessee challenged the same before the CIT(A) ground of appeal was with respect to the deletion of the addition of Rs. 3,09,16,658 on account of disallowance of prior period expenses. The CIT(A) dealt with this issue at Paragraph No. 7 of his order. The authorized representative submitted that this issue was covered in favour of the assessee as per the order of the coordinate Bench for assessment year 2006-07 as well as in ITA No. 2749/Del/2013 for assessment year 2008-09 dated 27-5-2019. He referred to Paragraph Nos. 42 - 45 at page Nos. 35 - 38 of that decision. Held: Tribunal has carefully considered the rival contentions. Disallowances were regarding the leave travel assistance claims of the assessee on account of reimbursement and telephone and conveyance expenses of the assessee. These expenses were disallowed by the AO. The bills were pertaining to the regular staff of the employees and were payable and paid at the time of settlement of their entitlement. It was irrespective of the time when employee had actually travelled. In same way, the telephone and conveyance expenses were also reimbursement of the expenditure which would be determining the claim of the employees and admitted by the employer. The special auditor had held so because of the reason that the actual travelling had taken in the previous year. Naturally, it is a matter of common sense for the purpose of LTA claim, the travelling of the employees was prior to the claims submitted by the employees. The CIT(A) had specifically dealt with one instance in Para 27.3 of his order. After verification of the details, it was received by the assessee from its employees during this period and after following the decision of jurisdictional High Court, the disallowance was deleted. Further, genuineness of these expenditure was not in doubt and allowability of these expenditure was also not in question, except classifying them as prior period expenses and there was no difference in rate of taxes for respective years. In the result, the order of CIT(A) in deleting the addition on account of prior period expenditure was confirmed.

Followed:Assessment year 2006-07 as well as in ITA Number 2749/Del/2013 for assessment year 2008-09, dated 27-5-2019.


FAVOUR : In assessee's favour.

A.Y. : 2009-10


Section 80-IB


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